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Proposition 2½

Proposition 2½ (Mass. Gen. L. c. 59, § 21C) is a Massachusetts statute that limits property tax assessments and secondarily, automobile excise tax levies by Massachusetts municipalities. The name of the initiative refers to the 2.5% ceiling on total property tax revenues annually as well as the 2.5% limit on property tax increases. It was passed by ballot measure,[1] specifically called an initiative petition within Massachusetts state law, in 1980 and went into effect in 1982. The effort to enact the proposition was led by the anti-tax group Citizens for Limited Taxation.[2] It is similar to other tax revolt measures passed around the same time in other parts of the United States.


  • Real and personal property taxes 1
  • Vehicle excise tax 2
  • Exclusions 3
  • Overrides and underrides 4
  • See also 5
  • References 6
  • External links 7

Real and personal property taxes

Under Proposition 2½, a municipality is subject to two property tax limits:

  1. Ceiling: The total annual property tax revenue raised by a municipality shall not exceed 2.5% of the assessed value of all taxable property contained in it.
  2. Increase limit: The annual increase of property tax cannot exceed 2.5%, plus the amount attributable to taxes that are from new real property.

These limits refer to the entire amount of the annual tax levy raised by a municipality. The property taxes are the sum of: (a) residential real property; (b) commercial real property; (c) industrial real property; and (d) business-owned personal property. In practice, it usually limits the tax bills of individual taxpayers, but only as an indirect result.

A side effect of Proposition 2½ is that municipality income will decline in real terms whenever inflation rises above 2.5%. Historically inflation has been above 2.5% for a significant majority of the years since 1980 (22 out of the 28 years to date), thus resulting in a real decline in local tax rates and local spending ability.

An exception allows the citizens of each municipality to override the 2½ restriction to address specific needs of the community thus giving the citizens direct control over their taxation.

Vehicle excise tax

The excise tax for automobiles registered in Massachusetts was also lowered by Proposition 2½. Previously, this tax was levied at a rate of $66.00 per $1,000 of car valuation (6.6%). Proposition 2½ lowered this rate to $25.00 per $1,000 of car valuation, resulting in a 2½ per cent excise tax rate,[3] but can still increase 264%, to the previous 6.6% tax rate if a Proposition 2½ operational override (see below) is approved by ballot in a community during a general (or special referendum) election.


Proposition 2½ excludes four cases from the limitation on tax levy increases:

  • "New growth": The Act allows for new growth. So, for example, when a new house is built, the tax levy may increase by the amount of taxes collected from that house.

And three types of exclusions granted by the majority those voting in a municipal referendum:

  • "Capital exclusion": Capital expenditure for the upcoming fiscal year;[4]
  • "Debt exclusion": For pre-1980 municipal debt or new debt issued for a designated purpose (e.g. bonds issued for a multi-year capital expense);[5] or
  • Water/sewer debt: For certain water and sewer system debt.[6]

Overrides and underrides

Municipalities may exceed or reduce the limits with the prior approval of the majority those voting in a municipal referendum to:

  • "Operational override": Override the increase limit.[7]
  • "Underride": The levy limit is reduced. Such a vote can be started by the Massachusetts initiative petition procedure, or the municipal legislature.[8]

The proposition originally required a two-thirds majority for passage of overrides, but the state legislature changed this to a simple majority in 1981.[9]

As of January 2009, municipalities had requested, via referendum, 4,449 overrides of Proposition 2½, of which 1,798 passed; 16 underrides were requested, of which 9 passed.[10]

See also

  • Proposition 13, the California tax limitation law that inspired the passage of Proposition 2½.[1]


  1. ^ a b  
  2. ^ Denison, Dave (Summer 1996). "The Odd Proposition". Commonwealth Magazine. 
  3. ^ Tompkins, Susanne. "Proposition 2½". McCormack Institute. 
  4. ^ Mass. Gen. Laws Ch. 59 § 21C(i½), via
  5. ^ Mass. Gen. Laws Ch. 59 § 21C(j,k), via
  6. ^ Mass. Gen. Laws Ch. 59 § 21C(n), via
  7. ^ Mass. Gen. Laws Ch. 59 § 21C(g), via
  8. ^ Mass. Gen. Laws Ch. 59 § 21C(h), via
  9. ^ Zimmerman, Joseph F. (1995). State-local Relations: A Partnership Approach. ABC-CLIO.  
  10. ^ "Proposition 2 1/2". Massachusetts Department of Revenue. 

External links

  • Levy Limits: A Primer on Proposition 2½ from Massachusetts Dept. of Revenue, Division of Local Services
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